Rights, the middle class, gender and more. For complete Television Schedule visit booktv. Org. Booktv, 48 hours of nonfiction books and authors, television for serious readers. Now we kickoff the weekend with Peter Kiernan talking about the history of the middle class. [inaudible conversations] good evening. I am the director of the redwood library. Please excuse my voice, my little twins came home with a gifted daddy yesterday and that was watery eyes and scratchy throat. First of all, a bit of housekeeping duties, if there is up fire you go out the front door, just push me aside and i will go down with the ship. Please turn off your cellphones. It gives me great pleasure, when we think about that i mentioned earlier, the word that is offputting to so many people, a public place where operators might try out their orations. A forum, two weeks ago we had the good people from newport show a documentary and richard holbrooke, a man whose values perfectly aligned with the intent of the redwood at its founding. I see this speech as continuing in that vein especially since when we think about the rise of the publics fear in the eighteenth century, that much theorized occurrence where the middle class pushed against king and court, the middle class is of capital importance in creating democracy the and and very important today as Peter Kiernan will tell us. I wont go on and on about all his exploits and there are many. He is an accomplished finance year and author but what is most important to me is the tenor, the thrust of the work he has been doing recently which is to remind us, excuse me, of what is important. These are really important, all the problems facing us today, it is the call to conscience and clarity of thinking, was watching the video where he talked at length about philanthropy and it was astounding. Thank you very much for coming and please help me to welcome Peter Kiernan. [applause] thank you very much. Thank you. It is so nice to be here, welcome to the free free debate. There are so many great friends and old friends and people i respect some much in this audience, this wont be a speech, this will be a conversation. I was told by my publisher whatever you do not come out with this book during the election. I turned and said i wanted to deliberately come out exactly in the middle of the election because i have been frustrated and many of you have with the generalities, with stale ideas Common Notions that have been tried and retried that get us nowhere by a polarity to get even the simplest things accomplished. So with your permission i published this book deliberately right now, not intending to interrupt or preempt donald trump or the rest of the gang on stage but be that as it may. I am a lucky man for many reasons. My wife and daughter are scheerer and they are some of my Many Blessings but one of the things i count as my greatest good fortune is i loved my first job. When i was in college i went to work for an afternoon newspaper. Imagine such a dinosaur. Our job was to get within printed by 1 30 so we would at home on your doorstep so you could read it before that evening news came on television. That was our life and while i was there was invite of the watergate iraq and sell all of the far more senior reporters were chasing their own dreams of glory and watergate opportunities. Something i came to love was to write the daily obituaries for the people of hudson, new york. When i first got that job by was put off by at but over time i came to love it and are made it my business everyday as i wrote these small daily histories to find the one thing about the person i had just gained an acquaintance on their passing. One thing that made him special, unique, or contributed to society. And in the process by was working for beer money at the time and my adviser said i needed work many hours. I came to a conclusion about life itself. That is it is the role of individuals far more than prognostication or a plank in a party platform, would have to do with how our society operates. Some of these individuals are the point of the spear, some are key ark in a narrative and even bey ark in a better than anythi is going on and they traveled into a devastated garden. There, hanging on the fruit trees were five patriots smoldering in the sun. The father lifted the boy up and held him as he gagged in reflex close to the feet of those patriots and ordered him to peach kiss each many football. As the boy win. He said sun, that is the smell of courage. That is the taste of liberty. That this has lingered in my mind for a long time ever since i read the words and we gave our own sort of kiss okay. You might when to hold iant. I left in the middle of the kiss. That is a terrible thing to do. I am not going one bit further. That is it. 16 million americans come back from world war ii from theaters of war, places they worked in the country and can you imagine 700,000 wearers of the purple heart. If we had a line today of every adult in long island we would run out of adult before we run out of purple hearts. That is how many google came back having given to their country. Led me interrupt one second. Lets take a minute and fix the sound system and then i will be happy to carry on. Come and do what you need to do and i will be happy to go ahead. Come on up, it is all yours. Excuse me just for one minute. There are six people here today and it is working just fine. I am going to turn this. Okay. My only thought is to keep your mouth close to that. Okay, i will try it again. That is what we need. Testing 12, testing 12. Back to the kiss. I just cant get away from it. Of day. Excus. Excuse kay. Excuse. Excuse me, ladies and gentlemen. For the 16 million men and women who came home, government, business, but the law, regulators, bankers, insurance companies, politicians, everyone reached out and said we owe a duty of care, we owe a kiss to the people who sacrificed for us. As a result what happened . We became and where the world super power certainly financially, certainly from the standpoint of manufacturing because of the rest of the worlds manufacturing capability was smoldering in ruins and how did we respond . The middle class responded with a fire. We rose to the occasion. It was easy to define who the middle class was in those days. It was largely white, it was the final by what people earn, the aspirations were easily affordable. You could get a house with 90 down and if you bought the appliances you could walk into your first house without putting a penny down. We educated people, we bought them homes, we treated the men and women who came back as if they were true citizens and they responded. What was the progression like . Our economy was 200 billion. By 1945 it had grown to 300 billion. By 1950, 500 billion. We were on a roll. We hit the trifecta. We were by the mid 1950s largest agricultural provider in the world. We were the largest manufacturer in the world. 1956 we were the Largest Service economy in the world. Nothing could stand in our way. How hitler might have handled that position we dont know but instead of guard dogs we came back with of a marshall plan. We rebuild japan, we rebuilt germany, we build the new europe and fed it with our growing middle class. In 12 years we had basically gone from manufacturing superpower to Service Super power and by 1956 most American Workers when they went to work put on a white collar shirt. We have evolved so quickly when the rest of the world was trying to pull themselves together. In the 60s, 70 of families can stay at home parents, typically moms but by the late 60s, social unrest started to creep in and cracks started to form in the facade of this fantastic middleclass masterpiece we created. By 1970 the three uglys descended. Double digit inflation, double digit Interest Rates, double digit unemployment, those were brought on by not one but me to commodity crises the second of which, the oil embargo of 1973 got all the attention but the first was far more pernicious. I will pause for a second, last the impact on the middle class. We shifted from a Gold Standard to Gold Exchange standard. Subtlety in all but the worlds of economics until people started to look at what that really meant. The Gold Exchange said it meant you could exchangeable for two currencies. At that time those currencies were the u. S. Greenback, the dollar, and the pound sterling. At no time the dollar surged past the pelham sterling as the currency of choice. In the 1970s they opened badly and one of the things Richard Nixon realized was people were taking their dollars in europe and saying we want to exchange them in to goals. What was developing was a run on the bank and the bank was us. Without spending as second with trading partners or anybody in the free world we dropped the Gold Standard and we impose tariffs on imports and froze wages. For brief shining moment enough to get Richard Nixon reelected it worked. Until it didnt. Then it was an unmitigated disaster. The three uglys crushed us. What happened to the money supply . Most people never looked. In the 34 years before we created this Gold Exchange standard our money supply only doubled. And the 34 years after which takes us to 2008 the money supply increased 13fold. We were a long way from the Gold Standard and we were borrowing and creating an economic colossus with serious flaws that theed directly at the middle class. And seeing a market crash. The market lost 20 of its value and to include the inflation, 60 of market value lanier terms was lost. It largely with and reported. That slow crash played to us until Ronald Reagan and paul volcker came to the scene and broke down the garbled mouth full. And they had no idea to fix it. The inflation was run away and jobs and the economy and growth were going nowhere. The prime rate went up 21 . Think about that today. 2 of month for most borrowers. Our economy was crushed. The only way to bring the fever under control was to nearly bankrupt the country. They raised the prime rate higher and higher, crushing manufacturing. Crushing automobiles, chrysler went bankrupt, crushing the building trades, crushing everything that required borrowing in order to grow. By 1983 the fever had broken. The fever had broken in the form of structural redistribution. What had basically happened was inflation dropped to 3 . The problem is for the middle class that relevant inflation. For all the moderation of inflation did not go down. What does it have to do with the middleclass . Middleclass life meant a new house, new car, healthcare, a college for your kids, retirement and the belief that your children were going to be better off than you are and that got absolutely crushed. How did they respond. Trace they put mom to work. By the 1970s 43 of women were working, way up. At a time only 10 had degrees. By 1960 of a 60 working and the third head degrees, today 70 , near complete reversal from the 70 stay at home moms the relevant inflation kept climbing and real wages were flat and family after family kept asking the same question. What do we do . How can we make it . How can we possibly survive . And then like the dawning of a new date occurred to them. Borrow. In 1957 there were a handful of credit cards. Ten years later in 1967 there were 100 million credit cards. By 2007 there were a billion credit cards in the country. By 2008 Consumer Debt stood at 123 4 trillion. Today we face an entirely different middleclass and global competition has gotten so acute that is where you have to look if you want to know what is going on with the middle class today. Outside our borders. Do not Pay Attention to the domestic policy, the solution is over there. Most people know that china and india sit at well over a billion people. There are a billion more chinese than there are americans in population. Lets get down the list, who is no. 3 gee q way down from those billion is the United States at 320. That much is well known. In the last five years change on the leaderboard has been pronounced and now the next five countries in terms of size of indonesia, brazil, pakistan, nigeria and bangladesh all with economy smaller than ours but growing much faster than our own. If you look at italy and spain and britain and france. Their 16 million, germany, it is shrinking. How much is japan shrinking . They expect their population will shrink by a third. There are whole cities in japan without a single woman of childbearing age. They are using, country after country, there part of the strategic plan, as the centerpiece, there are a billion new members of the middle class outside the borders. And the billion more, outside our borders in 20 years. One of the things that strikes me when i think of the United States ahead to pick one word that describes this when we are at our best that word is frontier. Whether it is the frontier of the west or the frontier science we have a new frontier and it is feeding the growing middle class of all of these countries that have middleclass as a centerpiece of their strategy. Inside borders for the middleclass. It is the most basic math, the solution, wages continued to stay flat. To give you a sense from 1948 to 1973 productivityand so did wages. From the oil embargo of 1973 to today productivity has increased by twice again, doubled again. But real wages have increased 4 . Where has all that money gone . I am afraid to say it has been structural distribution and we have not been told reliable information. Every month we get the jobs report, jobs data but the most important piece of information is left out, the market value of a job. Job is a job is a job. We are creating entrylevel lowwage jobs. And that is one of the big challenges. The face of the middleclass is changed dramatically. If you did the makeup of the country there are 45 million poor people in the country today, entirely too many but just above that are another 50 million that i call in my book covering for, a twist from an experience of poverty. One of the leading causes of bankruptcy for the lower and middle class is cancer diagnosis, a trip to poverty might involve something as simple as an accident in your car or a kid and sudden illness or the loss of a job so all these poverty fighting organizations whose sole motive was to get people above the poverty line, that no longer works. Take a much that snap, food stamps, Supplemental Nutrition Assistance Program this. Look at how that has grown. In the year 2000 we spending 20 billion on snap. 2012 we responding 83 billion, 48 Million People in our country were on food stamps. When i talk about having poor, 40 of the children in this country will spend some part of their childhood receiving food stamps. That is how the face of this countrys middleclass has changed. I want you to do me a favor. Imagine in your mind every Single Person living in the city of los angeles, everyman, won man child and add to that every man, woman and child giving in the city of philadelphia. All those people, that is how many people there are between the ages of 16, and 25. They are not in employment, education or training. Can there be anything more diminishing the being 20 years old, dropped out of school please see is ago, you dont read at grade double, you dont do math at grade level. Job opportunities, prospects, that is an anchor on the middle class and what is the solution . Too often incarceration. You then think of all the people in the world, 350 Million People, 7 billion more, think of all the people who are in jail, 25 of them are in the United States. No country in the worlds has a higher proportion or absolute number of children in prison than we do. I have gone to Rikers Island, i have gone to the high school fair. Kids in prison trying to study in high school outgrow their shoe size during their stay in prison. What do you get for that experience in Rikers Island . You get a good citizen at the end, someone who is trained to do something and be valuable, anything that is positive in terms of society as a whole . The only guarantees 70 of those young men in particular will be back in jail within 180 days. We have a fundamental problem with use in this country and we cannot ignore it. Anyone who is running for president and dozen have as part of their strategy what to do with these, that will cost us 1 billion the year annually. An anchor on middleclass development. One of the things that happens all the time is people say it is simple, this is simple, fix education and that will fix it. Fix education. End of conversation. I am going to take the other side of that. Just how good does that teacher have to be . Imagine the city of dallas. Dallas has got 1,000,002 people and growing. When the school bell rang today and the students walked out the door of their school, the number of people in the city of dallas, that is how many kids walked out of school with no home to go to. They walked out to their tenants, they walked out to the shelter, they walked out to their car, walked out to wherever they had to go, just how good does a teacher have to be for the eight hours he or she is teaching that young person to cope with the 16 hours of food in security, homelessness . We have a problem in this country that is multi layered. You cannot solve raised to the top or any Stimulus Program if people sitting in the class are hungry and scared and homeless. One of the things we have to do is face the world. We have to face the world because outside our borders that is where 80 of the purchasing power now lives. 92 of the Economic Growth is outside our borders. Pricing adjusts and now, we have the present that says he wants to create time and how for people at work overtime and im all for it, but those are necessary small steps are woefully insufficient to solve the problem of the middle class because heres the thing we should be in afraid of. If you really want to know a bit to be scared about, if the answer i dont know. I believe there will be 2 billion new members of the middle class, but what i dont know for sure is the